A Solid Investment Strategy
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Finance > Investing
Nov 30, 1999
A Solid Investment Strategy
As we all know, investing is not a sure thing. Indeed, you might consider it to be similar to a game. And, like in games, you don't usually know the outcome until the game has been played and a winner has been declared. Another comparison of playing a game and investing, is that in both you have to have a strategy. When you're talking about investment, it is sensible to have an investment strategy. What is an investment strategy? An investment strategy basically contains three elements. The plan for investing your money requires that you: (a) consider various types of investments which will (b) help you meet your financial goals in (c) a specific amount of time. Plus, you should be aware that each type of investment contains individual propositions that you can choose from. Let me explain this further. If you think about a clothing store, fundamentally it sells clothes. But those clothes consist of different types of products, like shirts, pants, dresses, skirts, undergarments, etc. Whilst the stock market offers an opportunity for investment, there are different types of stocks, which all contain different companies that you can invest in. It can quickly become very confusing, unless you spend some time in research. This is because there are so many different types of investments and individual investments to choose from. This is where your investment strategy comes in. Your strategy, combined with your risk tolerance and investment style, determine how and in what you will invest. If you are new to investments, it is advisable to work closely with a financial planner before making any investments. They will help you develop an investment strategy that will not only fall within the bounds of your risk tolerance and your investment style, but will also help you achieve your financial goals. Indeed, I would go further. Never invest money without having a goal and a strategy for reaching that goal! This is essential. If you think about it, you wouldn't ordinarily hand your money over to anyone without knowing what that money is being used for and when you will get it back! You are doing exactly that if you don't have a goal, a plan, or a strategy. It is a dangerous and vulnerable place to be, so always create a strategy for reaching your investment goal! After all, you wouldn't go into a game of poker, chess or even do a Sudoku problem without having a strategy in mind. Make sure you give your investments the same attention to detail.
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